FuturesTechs Blog

Things are getting interesting in the Oil markets, with signs of the market topping out. Our thoughts on the Brent contract are reproduced in this week’s Investors Chronicle, but there is something worth noting in the WTI as well, as per below, our commentary from this morning:

J Welles Wilder, one of the brightest minds in TA in my lifetime, and the guy who came up with indicators such as RSI, DMI and Parabolic SAR, suggests in his book “New Concepts in Technical Trading Systems” (published in 1978, so not that “new”!) that you can get a definitive signal when Divergences occur, by following his “Failure Swing” methodology. RSI topped out (with a reading of 76) on April 8th, when the price chart topped out at 113.46. We have since made a new high for price with a 114.83 print on May 2nd.

RSI topped out at 67.70 on that day (a lower high on the Indicator, a higher high on the price chart, or a “Bearish Divergence” as technicians call it). The low (on the RSI reading) between these two highs was 53, on April 12th. We broke below here yesterday, which gives a “Top Failure Swing” sell signal. These signals are usually pretty timely and robust.

We also broke support at 109.95 yesterday, which moved us “into the red” as far as our SkewBar is concerned.

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Here at Futures Techs we cover, on a daily basis, Brent Crude Oil, GasOil, NYMEX WTI (AKA Light Sweet Crude), Natural Gas and Carbon Emissions. Below is today’s comment and levels for Brent Crude, where we’ve seen a good move in recent sessions.

A bullish breakout on Wednesday was backed up beautifully by another strong session yesterday as we traded up from 80.41 to 82.40. In overnight trade we’ve extended these gains and have printed 83.01 as we write, getting above the next big resistance, the 82.94 high seen on August 4th.

So it’s all going rather well for the bulls and we’re now looking up to see where this can go next. The next big resistance dates back to early May and is the high/failure back then; 89.58.

That’s right. The next big resistance is 7 bucks away.  83.75 and 87.00 might try and have a say in the meantime.

Chart Levels

__________

R7  - 86.98

R6  - 86.28

R5  - 85.95

R4  - 85.00

R3  - 84.18

R2  - 83.75

R1  - 83.25

_____________

S1  - 82.94

S2  - 82.40

S3  - 82.11

S4  - 81.45

S5  - 81.13

S6  - 80.41

S7 -  80.00

$16.80 in 2 days. That’s how much July Brent Crude went up on Thursday and Friday of last week. That’s just under 15%.

A rise of just under 15% in 2 days? Excuse me? Are you serious?

Has anyone dusted off their pushbike over the weekend? If you didn’t you may be by next weekend! Make room for the car in the garage. You can get fit on a bike, and save on petrol!

And the price of Oil could go a lot higher in the coming days and weeks because we are in a bubble. So what does this mean for us as traders?

I tell you one thing: It doesn’t mean sell it!! This is a common mistake to make. You don’t get prizes for selling the top of a market. You shouldn’t be trying to sell into such rises. What’s wrong with trying to get on the dominant up-move? Or to get back to the pushbike theme don’t you prefer cycling with the wind behind you rather than it blowing into your face?

We could easily go to $150, or even beyond, and it can happen in the coming days or weeks.

Even if I look back at this Blog and today turns out to be the day we topped out I wouldn’t be worried, because I can safely say I don’t care if I miss the first 10% of the sell-off, because there will be a lot more to go to take advantage of.

Last week, when we were selling off, we said that we’d expect the buyers to return to the fray at some point, and we had a key support at 121.40 suggested as a bold level. What was the low? 121.32.

It’s much better to buy a pullback in a strong uptrend than continually try and bat against it by being short.

Just think about being on your bike on a windy day!!